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Feb 21, 2017

Government Risks Debilitating Consequences with Superbond Delay

John Briceño

Government’s inability to make the twenty-six million dollar Super Bond payment that became due on Monday comes as no surprise to the Opposition.  In fact, default on the debt obligation was anticipated, according to P.U.P. Party Leader John Briceño, who says that bold assertions made by Prime Minister Barrow back in 2012, of having fixed the Super Bond dilemma once and for all, were furthest from the truth.  In a one-on-one interview with Briceño earlier today, he spoke openly about government’s failure to honor its commitments to bondholders, resulting in the precarious situation the country now finds itself in.  While there seems to be a glimmer of hope that the unresolved matter will be settled during the subsequent grace period, Briceño firmly believes that nominal gains will have detrimental long-term consequences, particularly since there are clauses which speak directly to defaulting on interest payments.  Here is his take on the unrewarding outcome of the PM’s recent travels.

 

John Briceño, P.U.P. Leader

“As we’ve always pointed out, we in the People’s United Party would support any initiative that would have some positive effects in the lives of the Belizean people, but we were not really shocked by the prime minister’s pronouncement on Sunday.  We need to remember that in 2012 when the prime minister announced that he has “dealt with the Super Bond once and for all” which is, in effect, the U.D.P. Super Bond 2.0, that he had solved this and this would no longer be a problem for the Government of Belize.  During those negotiations he made four commitments to the bondholders.  One: that he was going to increase revenues, code word for taxes.  Two: that he was going to cut expenditure, another code word for retrenchment.  Three: that he was going to grow the economy and four: that he was going to reduce government borrowing to sixty-seven percent of GDP.  The prime minister failed in all four commitments to the bondholders, so I am not surprised to the reaction of the bondholders.  Now, the government, rightly so in negotiations you play hard ball, tried to get the best deal possible and maybe there is still a little bit of hope that we can get maybe something to say that, you know, we that we won something.  But whilst the prime minister may be able to politically wave his flag of victory, I think these small term small gains can have long term negative effects on Belize.  It affects investor confidence, it affects foreign direct investments and thirdly, as we have seen with the U.D.P. Super Bond 2.0, that the devil is in the details.  We have to see very closely, we have to study what would be the new arrangements slash agreements that the government would do to get something out from these investors because now we have found out that in U.D.P. Super Bond 2.0 that there was this default clause that, should we default, two things are going to happen.  The interest rates are going to go up, I think it’s eleven percent and that there’s going to be a penalty of over a hundred million dollars.”

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1 Response for “Government Risks Debilitating Consequences with Superbond Delay”

  1. CLUTE says:

    Yes SIR and I just commented on that yesterday under the caption where he blatantly lied that the payment wasn’t really due until today, Tuesday, anyway since banks were closed. SMMFH. CROOK AND A LIAR.

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